An EU system to prevent a repeat of the massive bank bailouts which crippled the economy is a major step but it is also too complicated when speed is absolutely essential, analysts said.

"From the moment a bank is identified as being at risk, up to the moment it is closed, the new system might require approvals from as many as 100 people," said Annalisa Piazza of Newedge.

The authorities must wind up a failing bank as quickly as possible, and above all, while the markets are closed if they want to limit the fallout and the possibility of a run on deposits.

Fail to do that and the risk is one problem bank will bring down others, setting off a disastrous chain reaction and sucking in governments, as in Ireland, which eventually had to seek an international bailout.

EU finance ministers agreed Wednesday a Single Resolution Mechanism to close problem banks, with the cost covered by a special bank levy to be phased in by 2025.

The SRM will work alongside an already agreed new supervisory regime run by the European Central Bank.

The last element, a common deposit guarantee system to reassure nervous savers, was put in place Tuesday after European Parliament approval.

This banking union system was drawn up in response to the financial and then debt crises which brought down many banks and drove the eurozone into a deep and damaging recession.

It involves possibly the biggest transfer of national sovereignty to Brussels since the euro was created and as a result, required painful compromises which show up clearly in its workings.

For example, some countries such as EU powerhouse Germany were reluctant to give Brussels too much power over their banking system.

France, in contrast, pushed for a fully centralised 'single system' covering all eurozone banks, not just the larger ones, arguing that problems often arise first in the smaller lenders.

For Paris, it was the European Commission that should oversee the SRM and so have the last word on a bank closure decision.

In the event, an SRM board will decide and while the Commission has the right to object, it will have to get the EU finance ministers to back it up -- a process likely to take much too long to be a practical option.

'Everyone for themselves'

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A Berenberg Bank research report said the banking union was a "historic step" but also a compromise between countries "worried about the stability of their banks and those unwilling to put their taxpayers' money at risk".

In the end, it was the latter -- championed by Germany -- which largely won out but with the result that there are "certain weaknesses in the small print of the plan," it said.

"The Single Resolution Mechanism is 'single' only in name compared with the Single Supervisory Mechanism at the ECB," said Nicolas Veron of the Bruegel Institute in Brussels.

"In the supervision system, there is real pooling of sovereignty but (with the SRM), it is still everyone for themselves," Veron said.

Martin Schulz, head of the European Parliament which must now approve the accord, warned bluntly the SRM could not work fast enough, precisely because the Commission has been effectively sidelined.

The process "is comparable to dealing with an emergency admission to hospital by first convening the hospital's board of directors instead of giving the patient immediate treatment," Schulz told an EU leaders summit Thursday.

"If a bank cannot be wound up within a weekend in order to prevent a run on the banks, the system is too complicated," he said.

A banking union built on this basis "would be the biggest mistake yet in the resolution of the crisis" and could even "jeopardise financial stability".